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The continuing SEC v. Ripple litigation shows no indications of being resolved. Ripple has submitted a sur-reply (extra reply) to the SEC’s reply in support of its request to strike Ripple’s Fourth Affirmative Defense.
The blockchain company’s response was centred on Cornerstone Research’s May research. In its counter-reply, Ripple claimed that the SEC’s earlier activities in the digital asset field were “insufficient” to give Ripple with fair notice that their unregistered XRP sales may be unlawful. They also argued that “due process” had not been followed.
In its recent reply letter, SEC outrightly stated that Ripple’s arguments were based on “incorrect characterization” of the fair notice defense. They went on to assert,
“Ripple’s argument boils down to this: because none of the SEC’s prior digital asset cases involved the exact, same, identical facts as this case, Ripple lacked sufficient fair notice, such that it cannot be liable for violating Section 5’s strict liability provisions.”
According to the SEC, fair notices do not have to be “exactly factual.” They also claimed, while playing the blame game, that Ripple provided no proof to the contrary.
The regulatory body went on to claim that the “abundance of caselaw” interpreting and applying Howey, as well as other further guidance it issued, provided the blockchain industry with all of the “constitutionally required” notice.
They further stated,
“Here, Howey and its progeny’s “flexible rather than… static principle” would be nullified by a ruling that fair notice defense can defeat any claim involving an investment product that is not identical to one previously deemed a security.”
People from the community were swift to react to this update. Popular defense attorney, James K. Filan, for instance, tweeted,
“It’s a pathetic response.”
It is also worth noting that the SEC has requested the court for more time to compile its discovery factual record. Ripple, for its part, said that granting the SEC’s request for further time would pose a “existential threat” to its operations in the United States.